Automotive News reports that the 86,000 independent repair shops in the United States will be the beneficiaries of $5 billion in business spurred by dealership closings.
The breakdown, they state, is $2 billion in parts sales and $3 billion in labor sales. Those are the findings folks, but wait a minute. I think this is grossly overstated and some things are not right with their assumptions.
If you go on their numbers every independent shop is going to make an additional $58,139 on average. Really?
Ever since car sales tanked, the media has been jumping up and down that those of us who repair cars are rolling in the money because everyone stopped buying cars and now they are fixing them. Reality check: everybody stopped buying cars because they didn't have the credit or the money to do it.
The frequent financial failures of news outlets demonstrates that news folks are not mathematicians, so it should come as no surprise that they would come up with this theory.
Reality check number two: if folks are credit- and cash-flow challenged, they are not rushing to make repairs to their cars unless they break.
We are finding that our customers pretty much behave as they always have. The folks who maintained their cars still do and are looking to extend their ownership for longer than originally planned. The serial car killers still neglect until the car drops dead. The one notable difference is that the serial killers' line of credit is forcing them to keep their victims on life support.
Overall, the repair market has shrunk. If you think I am wrong, look at how many shops of all kinds have closed in the last 18 months. It is not like consumers got it all figured out in a year and a half and now only frequent businesses that their extensive research indicates are top-drawer repair facilities.
Now back to the folks who did the research for Automotive News. The first problem is they got the total number of independent repair shops in this country wrong by at least 50,000, unless it was their intent to not include all the national chains and franchises.
Reality check number three revolves around the number of dollars they claim are leaving the dealer segment and entering the independent segment. Prior to many dealers closing or being selected for extinction, those dealers who were not busy nor were many of the same brand dealers who can now easily absorb much of the work that is out there. The warranty work is a given. Perhaps the additional warranty work will fill dealer service bays, but in light of who is selling vehicles and how well they build them, I think that is also a hard number to extrapolate.
The fact is that folks who go to dealers will probably continue, and those who love independents will keep making that choice, God love 'em. Are there customers up in the air? Are their challenged loyalties? You bet. All repairers need to step up to the pump and not act like they have some exclusive right to any particular customer's loyalty.
Will $2 billion in parts sales drop into the aftermarket's lap? Some of it for sure, but some of the parts sales will still go back to the remaining dealers. Will $3 billion in labor sales go to the independent shops? No, because many of those jobs will go to dealers who are still around. Opportunities will abound, but I don't think you can call it a slam dunk.